Warrior Trading Blog

Before the Bell Score +1,525 | Steve’s Futures Pulse 176

Steve_7.17

Hey what’s up fellow traders, happy hump day, it’s Wednesday and I’m all done trading for the day. In about 38 minutes in front of the screen I scored on the short side again in the E-Mini S&P. About 15 minutes before the opening bell at the New York Stock Exchange, I found a nice opportunity in the futures markets for the E-Mini S&P.

In today’s Futures pulse, I’m going to show you how I scored 1525 and was done trading by 9 a.m. Chicago time. Enjoy today’s Futures pulse as we dive into the charts. C’mon!

Okay, let’s dive into these charts here, so I can show you how this trade came to life, what I saw technically, and how we scored as you can see, 1525 on the trade when it was all said and done. This is a 30 minute time horizon, which was the time frame that we were really focused on. The ten minute chart also had revealed some bearish activity as well on the chart and I could show that to you. Actually, I’m going to do that right now so you can see this. See back here, you can see the bearish, that’s the ten back there, but let’s focus on the 30, because that’s was what really guided our decision.

You may recall yesterday we found nice breakdown opportunity and scored over $4000. In a similar set up here, this one initiated at actually a little lower price, but the pattern I looked for was very much the same. Okay, so let’s talk about why I initiated the trade. It was about 15 minutes before the opening bell so it was on this bar right here that I’m going to highlight, okay? What I was paying attention to is the fact that the market was perpetually closing down below that key demand zone at 3008 1/2, if you draw a line over here you can see this green area here shows you what the value of that is.

So again, about 15 minutes before the open, I wanted to be on the short side of this market. I saw congestion up above, so this is your market profile, which remember, again is taking volume, which is just at the bottom of your painth on most of your charts if you are just doing classic technical analysis. It takes this and we flip it sideways like this so we have a horizontal histogram, which allows us to do something very simple, but profound; which is, see at what specific prices all of the activity is amassing, okay?

So, in this red color zone in the background there, that’s where approximately 70% of the volume is occurring and how we leverage that as market profile traders as that when it’s above our trade, that will be resistance. Of course when it’s down below, would be support. Anyways, we started to see the market breaking down. The first entry into the trade on a six unit was 3006 which is right there where I drew that line. The market actually came back up, starting coming up towards the inflection point, so we were down a little bit $50 a contract and I added to the position at 07 and 08, okay?

If you pay attention to where those are, those are all still short and below that 3008 1/2 level, okay, so I amass basically 66618 at one point and we had moved our spot down here to the 11 1/4 mark. Right there when we did that, so we had risked with a cost average of 3007 up to 11 1/4, because we knew that we had a good chance and probabilities were in our favor that the market was still going to dive lower and even if the market came back inside the value area, we had this POC level at 10 1/2, okay?

So live in the Future’s room, I was talking about that being kind of our big line of defense. The master point of control of well, which is the yellow line that you see if you squint your eyes and put your nose right on your screen, you can see this yellow horizontal line that starts back here. That’s the highest volume traded price on the board, which when that’s above us, okay, we love to see it above us, because that’s going to pressure the market, so that worked in our favor.

Long story short, you can see as we got a little further on the 8:30 a.m Chicago bar, which is right here-that bar, we started to get the push lower. That’s what we were waiting for and as the market came down, I did want to alleviate some of the risk since I had added twice to this position, okay? I added not because I was just gambling on the trade, it was because we still had good inflection points, we had good resistance up above, so I just felt better about bringing my cost average up. But, as the market broke lower, we did cover 12 of the 18 at 05 1/2, covered another five at 04 1/2 so we had taken a good chunk of profit all ready out of the table and we eliminated 95% of our risk, so we were down to a single runner at that time.

Then what we did with the final runner, which is something I like to do, which is if I amass a multi lot position, in this case at 1.18, I trim it all the way down to one. I want this last one to be kind of like a free trade in the market, okay? We all ready scored over 1400 on the trade. So I move this time to 3007, okay and market volatility did come up and grab us on that. You can see on this bar we did come up there, stopped us out at 3007. That’s how we ended up landing at 1525 on getting stopped out at that final unit. 18 by 18 and then of course, look at what you see happens. This is I guess bittersweet, right, in that we were right looking for the move to go lower. We gave it a chance by moving our stop lower, still keeping an open ended profit objective on that last free, kind of free lottery ticket if you will. Or a free chance to swing for a triple or a home run and but volatility struck us out.

As I told everyone, in the chat room, I said hey look, you know we did everything right technically on the trade. We pinpointed the right side of the market to trade, we went after it, we didn’t second guess. In fact, we added to the trade, because it was at a good inflection point. We had good resistance. The market broke, we made some money, we trailed our stop on the final unit. Volatility? Sure it stopped us out but it just as easily could have held and that break could have happened and then we would have had an even better green day than we did today. So again, never, no one ever went broke taking a profit, let’s put it that way, okay?

We will be back at it tomorrow. I’m done for the day. I don’t know where I’m going to be allowed to wear this ugly Hawaiian shirt, but I’m going to see if I can find a place. I’ll meet you back at the markets next time and until then, trade well.

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